06/22/2011

Standard General Speeds Toward Asset Goal

After tripling assets under management in the past two years, Standard General is making an all-out push to reach the $1 billion mark.

Founders Soohyung Kim and Nicholas Singer, who previously worked together at Cyrus Capital and Och-Ziff Capital, are telling prospective investors they see an abundance of opportunities for their strategy — namely event-driven investments in mid-cap companies. They have been out meeting investors with increasing frequency, placing a strong emphasis on raising capital from pension funds and other large institutions. The two also have made a point of speaking at industry conferences.

Their New York firm got off the ground in 2007 with a $100 million seed investment from Reservoir Capital. Thanks to strong track records they first developed at Och-Ziff, and then Cyrus, Kim and Singer did little active fund raising during the first couple of years.

Then, in mid-2009, they hired former Serengeti Asset Management marketing executive Stephen Usher to spearhead a fund-raising campaign. At the time, Standard General had about $200 million under management. Since then, assets have swollen to $600 million.

Kim and Singer have told investors they want to quickly raise another $400 million or so to capitalize on distressed-investment opportunities in the gaming, power and retail industries. They’ve also said they plan to stop accepting new investors once the fund reaches $1 billion of assets.

Standard General invests in the debt and equity of companies with market capitalizations between $500 million and $5 billion. The fund finished out 2007 with an 8% gain, then lost a relatively modest 8% in 2008 — when the average hedge fund fell 18%. It came back with a 20%-plus gain in 2009 and rose more than 10% last year. Initial shareholders have seen their investments grow 35% since inception.

“You know with Standard General that they will deliver good downside protection, particularly given their current cautious views,” said Brad Balter of Balter Capital, a Boston fund-of-funds operation that recently added Standard General to its stable of managers. “And in general, due to their ability to source event-driven long positions, they provide a good ratio of upside capture.”

Kim joined Och-Ziff in 1999 from Bankers Trust. Singer arrived three years later from Goldman Sachs. The two stayed at Och-Ziff until 2005, when they left to help a former colleague, Stephen Freidheim, form Cyrus Capital.

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